*

US Fed holds rates, slows balance sheet drawdown

*

Brazil rate verdict awaited, expected to hike

*

Turkish lira hits record low, local stocks plunge

*

Latam FX up 0.2%, stocks climb 1%

(Updates with mid-session trading)

By Shashwat Chauhan and Purvi Agarwal

March 19 (Reuters) - Latin American currencies were

mixed on Wednesday after the U.S. Federal Reserve left interest

rates unchanged and projected two cuts this year, while Turkish

assets took a hit after authorities detained President Tayyip

Erdogan's main political rival.

The Fed held interest rates steady but the central bank's

policymakers indicated they still anticipate reducing rates by

half a percentage point by end-2025 in the context of slowing

economic growth and eventually, a downturn in inflation.

"The Fed remains in no hurry to cut interest rates, but

President Trump's spending cuts and trade protectionist policies

are hurting growth prospects and will likely force the central

bank's hand later in the year," said James Knightley, chief

international economist at ING.

The dollar was 0.2% higher, pressuring some Latin

American currencies such as the Mexican peso and

Colombia's peso that fell 0.8% each.

Turkish assets were hit hard after authorities detained

Istanbul mayor Ekrem Imamoglu, the main rival of President

Tayyip Erdogan, on charges of corruption and aiding a terrorist

group in what the main opposition party called "a coup against

our next president".

The lira plunged as much as 12.7% earlier in the

day to a record low of 42 per dollar, marking its worst day

since June 2023. Local stocks closed 8.7% lower while

its international bonds also saw heavy selling pressure.

Turkish Finance Minister Mehmet Simsek said that everything

necessary is being done to ensure the markets are functioning

healthily after the slide, without giving any further details.

The central bank sold a record amount of foreign currency on

Wednesday, according to calculations by three bankers.

"There were very strong signs that Turkish assets would be

giving positive real interest rates, but now there is currency

volatility," said Emre Akcakmak, head of frontier markets and

portfolio adviser with East Capital Group, also pointing that an

interest rate cut was potentially off the table now.

"Foreign investors will likely be discouraged by all

these uncertainties."

The central bank cut rates for the first time in December

after an 18-month tightening effort that had reversed years of

unorthodox policy and easy money backed by Erdogan.

Back in LatAm, Brazil's real firmed 0.4% ahead of a

local interest rate decision later in the day, when it is widely

expected to hike rates to bring the Selic rate to 14.25%.

Brazil's government kept its economic growth forecast for

this year unchanged at 2.3%, while slightly increasing its

inflation estimate.

Chile's peso held firm at 916.35 per dollar, with an

interest rate decision expected on Friday.

MSCI's index for Latin American currencies

was slightly higher, while the stocks gauge

gained 1%, trading at its highest since early November.

Heavyweight Brazil added 0.8%, while Mexican stocks

were up 0.5%. Argentina's Merval jumped 3.7%, as

the country's IMF deal faced a key vote in the local Congress.

Elsewhere, Ukraine's international bonds and the Russian

rouble fell after Russian President Vladimir Putin agreed

on Tuesday to stop attacking Ukrainian energy facilities

temporarily but declined to endorse a full 30-day ceasefire.

U.S. President Donald Trump and Ukrainian President

Volodymyr Zelenskiy agreed to work together to end Russia's war

with Ukraine, in what the White House described as a "fantastic"

one-hour phone call.

Highlights:

**

Argentina's 2024 economy shrinks 1.7% despite late-year

rebound

** Panama's economic growth slows to 2.9% in 2024 after key

mine closure

Key Latin American stock indexes and currencies around 1950

GMT:

MSCI Emerging Markets 1143.29 -0.16

MSCI LatAm 2151.82 0.95

Brazil Bovespa 132494.78 0.78

Mexico IPC 53027.83 0.48

Chile IPSA 7594.95 0.12

Argentina Merval 2372939.9 3.69

7

Colombia COLCAP 1623.55 0.01

Brazil real 5.6461 0.43

Mexico peso 20.0516 -0.75

Chile peso 916.35 0.04

Colombia peso 4148.5 -0.77

Peru sol 3.619 0.14

Argentina peso (interbank) 1068.75 -0.02

Argentina peso (parallel) 1260 1.98